Housing sector gains fail to inspire London market

Charles Church owner Persimmon lifted 7 per cent, with similarly big hikes for its fellow FTSE 250 firms Taylor Wimpey and Barratt Developments thanks to news of another 1 per cent house price rise in December.

Supermarket Sainsbury's was also making gains after a well-received Christmas trading update, but the wider FTSE 100 Index slipped 3.32 points to close at 5526.72.

Meanwhile, investors on both sides of the Atlantic appeared unimpressed by US jobless figures, which signalled layoffs were easing and that the US economy could be on the verge of posting the first monthly gain in jobs in two years.

The number of Americans claiming unemployment benefits barely rose last week, but the Dow Jones Industrial Average was down around six points in early trade.

The number of US workers filing new jobless claims edged up by a slim 1,000.

The Labor Department said yesterday initial claims for state unemployment benefits rose to 434,000 after declining for two consecutive weeks. Wall Street analysts had expected claims to hit 447,000.

However, the four-week moving average, considered a better measure of underlying labour market trends, dropped to the lowest level since mid-September 2008. The average fell for the 18th straight week to 450,250 –around the level economists associate with labour market stability.

There was also little reaction in the UK to the Bank's latest decision to hold rates at 0.5 per cent and leave its 200bn Quantitative Easing programme unchanged.

However, the pound lost ground to the US dollar amid ongoing concerns over the Government's ballooning deficit and the looming general election, with sterling dropping to 1.59 dollars.

There were mixed fortunes in the retail sector after Sainsbury's surged in the wake of strong figures but Marks & Spencer and Next continued to struggle after updates this week fuelled worries about 2010 prospects. M&S was down 63/8p to 371p and Next slipped another 42p to 2059p.

The supermarket sector fared better after Sainsbury's delivered third quarter trading figures at the top end of expectations. Shares were more than 3 per cent higher – up 101/4p to 3281/4p.

Among fallers, National Grid eased 15p to 6521/2p as the power firm issued its second gas balancing alert after the UK's freezing weather pushed demand to record levels.

A National Grid spokeswoman said technical problems had also led to a 52 million cubic metres shortfall in supplies from the Langeled pipeline, which pumps in gas from Norway.

Outside the top flight, housebuilder Persimmon surged 31p to 500p after the Halifax news.

In a trading update, Persimmon added that forward sales at the start of 2010 were up 40 per cent on a year earlier, while the company also reported a better second half of 2009.

Barratt Developments joined in the rises, gaining 63/8p to 1383/8p, while Taylor Wimpey added 17/8p to 411/2p.

Elsewhere, transport firms were lower after the Office of Fair Trading's referred the bus sector to the Competition Commission after its inquiry found that firms resort to savage tactics to ward off new entrants on local routes.

Go-Ahead dropped 24p to 1325p and National Express eased 21/4p to 194p.

Biggest risers were Lloyds Banking Group ahead 23/8p to 567/8p and Wolseley up 49p to 1410p.